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- Dow Jones and S&P500 move to new highs as lawmakers pass a sweeping $1tn package
- As the legislation moves to the House, stock futures are mildly lower ahead of regular trading
Dow and S&P500 Close at Records
US stocks moved mostly higher on Tuesday with the S&P500 and the Dow Jones Industrial Average setting new closing highs. This comes after the Senate passed the long-anticipated $1tn infrastructure package.
The bipartisan victory, which marked a historical milestone for the US economy and Joe Biden’s presidency, was hammered out after months of negotiations. Several times the package had to be resized. Finally, the slimmed-down version of roughly $1tn was backed 69 to 30 votes. The legislation sailed through the Senate with 19 Republicans in support of the spending, joining all 50 Democrats.
Investors cheered the passing of the stimulus bill directed toward fixing bridges and roads, improving public transit, and providing better broadband internet. Stocks moved higher across the board, led by shares of energy, material, and industrial companies.
The Dow Jones Industrial Average added 162.82 points, or 0.46%, to close at a fresh record of 35,264.67, the 31st record close of 2021 for the blue-chip benchmark. The S&P500 eked out its 45th record close of the year as the index added 4.40 points, or 0.10%, to finish the session at 4,436.75.
The Nasdaq Composite lagged as tech stocks couldn’t get a lift-off. All the while investors flocked to economically sensitive stocks poised to benefit from the bountiful spending approved earlier in the day. The tech-heavy index was dragged lower by big tech stocks and dropped 72.09 points, or 0.49%, to 14,788.09.
Markets Calm Ahead of Vote
The passing of the $1tn infrastructure package was interpreted as another strong sign the US economy remains on its upward trajectory. The legislation, however, is still not converted into law. Indeed, the proposal needs to first land in the House of Representatives.
As the bill is expected to head to the House as soon as Wednesday, Democrats have tied its fate to an even bigger budget bill with a price tag of $3.5tn. Thus, the budget, filled with Democratic priorities, includes spending on antipoverty efforts and funding clean-energy projects. On that matter, progressive Democrats have said they will not support the bipartisan bill unless the separate Democratic agenda advances together with it.
However, the markets seem calm ahead of the expected House vote on the $3.5tn budget blueprint. Stock futures hover flat and slightly to the downside. Futures contracts tied to the Dow Jones are lower by about 10 points. While S&P500 futures are down less than 0.1%. Nasdaq futures are also little changed.
Besides the crucial vote in the House, investors will be on the lookout for the latest US inflation data. The consumer price index (CPI) report will be presented by the Department of Labor. The CPI reading is a key gauge for inflation as it measures how prices for consumer goods and services change over time.
Meanwhile, overseas, European stocks keep steady after the region-wide Stoxx 600 Europe closed above 472.00 points for the first time. The benchmark average added 0.35% on Tuesday and finished the day at a new record of 472.32. All major European bourses yesterday closed in the green, higher between 0.15% to 0.40%.
Digital assets remain elevated on Wednesday after a dizzying rally that went on for about three weeks. Thus, major coins like bitcoin and ether eased slightly from their recent highs on Tuesday but remained in positive territory. The leading crypto token finished the day barely changed but is still in the green by about $40. In Fact, Ether advanced 2.8% to end the day at $3,155 per coin.
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